IMF debt: time running out for Zim

ZIMBABWE is now left with only three months to make or break its relationship with the International Monetary Fund (IMF) as the country has to make significant progress to settle its US$291 milli
on debt.

Zimbabwe, which has failed to service its IMF debt since February 2001, is the first country to have protracted overdue obligations to the IMF’s Poverty Reduction and Growth Facility (PRGF).

As at June 30, Zimbabwe had been making monthly payments of US$1,5 million. Zimbabwe lost its voting rights in the 184-member grouping last year. In July, the IMF gave Zimbabwe a stay of execution for a period of six months to pay its arrears to the institution.

Although Zimbabwe has been making some repayments to the multi-lateral institution, the IMF said the country was making small payments to clear its arrears of US$291 million.

Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono told businessdigest that the country was making efforts to repay the international financial institution.

“We have significantly made improvements on repayment. We are no longer repaying US$1,5 million a month. We have definitely improved. Imagine if we can pay US$10 million in one day for fuel, by how much can we fail to increase our payment?” he said.

In a review of countries in protracted arrears to the IMF, the multi-lateral financial institution this week said Liberia, Somalia and Sudan account for 88% of all overdue debt obligations, with Sudan making up more than 52% of total arrears at the end of June.

The IMF said other debtors were Iraq and Zimbabwe which owe the institution US$80 million and US$291 million, respectively in default.

Total arrears to the IMF were about US$3 billion as at the end of June.

Economist John Robertson said considering the crisis besetting the country and the issue of priorities, Zimbabwe had no realistic chance of repaying its arrears since the amount owed to the IMF “is a lot of money”.

He said Zimbabwe was making a token payment so that IMF “will say we are trying our level best”.

Robertson said the IMF would not expel Zimbabwe as the matter has to be put to vote.

“Expulsion will not happen as the countries have to vote and Zimbabwe has support from other African countries,” Robertson said. “The IMF will not expel Zimbabwe. The country will remain a member without voting rights as well as borrowing powers”.

Zimbabwe was also excluded from a United States Bill providing for the cancellation of debts owed to the IMF by selected 50 poor countries. The Justice and Understanding by IMF Loan Elimination and Equity (Jubilee) Bill, if enacted into law, intends to cancel multilateral debts owed to the IMF by eligible poor countries while promoting human and economic development and poverty alleviation.

“The IMF shall cancel all debts owed to the IMF by eligible poor countries and finance the debt cancellation from ongoing operations, procedures and accounts of the IMF established as of the end of the most recent fiscal year, including the Poverty Reduction and Growth Facility (formerly known as the Enhanced Structural Adjustment Facility,” the Bill says.

The Bill says the waiting period for debt “cancellation shall not exceed one month from the date of eligible poor country’s application for debt cancellation”.